BIR Ruling [DA-067-96]

February 7, 1996 BIR RULING [DA-067-96] Hon. Frumencio A. Lagustan Assistant Executive Secretary Malacaang S i r : This refers to your letters dated October 27, 1995 and January 5, 1996, requesting our comments and recommendations as to whether or not S.B. 1192 entitled "AN ACT PROVIDING FOR ROADS, ALLEYS, SIDEWALKS, DEFINING OPEN SPACE IN RESIDENTIAL SUBDIVISIONS, AMENDING PRESIDENTIAL DECREES 957 and 1216, AND FOR OTHER PURPOSES" should be certified by the President as an urgent legislative measure. cd The proposed bill authored by Sen. Freddie N. Webb provides in Section 4 thereof as follows: "SEC. 4. Exemption from taxes . The roads, alleys sidewalks and open spaces in a subdivision project being reserved for public use and beyond the commerce of man shall be exempt from the payment of real estate taxes from the time of approval of the project by the HLURB". "The pertinent provisions of the National Internal Revenue Code and R.A. No. 7160 in this regard are hereby repealed and/or amended". By way of comment, real property tax or real estate tax is not an internal revenue tax but a local tax. It is levied under the Local Government Code and not under the National Internal Revenue Code. It would seem therefore that the second paragraph of Section 4 of the proposed bill which seeks to repeal and/or amend the National Internal Revenue Code is unnecessary, there being no provision in the said Code imposing real estate taxes. In view of the foregoing, it is suggested that the proposed Senate Bill which seeks to exempt roads, alleys, sidewalks and open spaces from real estate taxes be referred to the Department of Finance which was jurisdiction on the matter. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue